Wednesday 28th September 2016

Resource Clips


Unrestrained Renard

Stornoway expands resources while building Quebec’s first diamond mine

by Greg Klein

Stornoway expands resources while building Quebec’s first diamond mine

Financed through to completion, Renard’s
construction continues on schedule.

With Renard on schedule for H2 2016 commissioning and Q2 2017 production, Quebec’s first such mine will make Stornoway Diamond TSX:SWY the world’s sixth-largest company producing the gems. Yet Stornoway’s ambitions continue to grow along with its resources, which got an estimate upgrade on September 24. Now the company’s emboldened to schedule a mine plan update for Q2 next year, even though mine construction has already reached the mid-way point.

Among the resource highlights is a 15.6% boost to the indicated category for Renard 2, despite a 16.4% drop in grade. One of the project’s seven resource-rich kimberlites, Renard 2’s inferred category now extends to 850 metres in depth. Overall, the project’s indicated category grows 11.4%, while the upgrades subtract 20.8% from inferred resources.

Indicated totals for Renard kimberlites 2, 3, 4 and 65 show:

  • 42.63 million tonnes averaging 71 carats per hundred tonnes for 30.17 million carats

The indicated resource includes a probable reserve showing:

  • 23.78 million tonnes averaging 75.5 cpht for 17.95 million carats

Of that, the company considers 1.91 million carats open-pittable, with the other 16.03 million requiring underground extraction.

The inferred category for those four kimberlites plus Renard 9, Hibou and Lynx totals:

  • 24.49 million tonnes averaging 54 cpht for 13.35 million carats

Stornoway sees “substantial new exploration potential” for the adjacent Renard 2 and 3 pipes down to 1,250 metres in depth.

“Renard 2 at 600 metres’ depth is moderately smaller in cross-section than we had previously estimated,” conceded president/CEO Matt Manson. But “it is continuing downwards to a depth and on a scale that makes it unique amongst Canadian kimberlites. In a development that is particularly exciting, we now see the potential to mine the high-grade Renard 3 kimberlite deeper than we had previously thought possible, following its re-discovery during the drilling at 1,000 metres’ depth, 500 metres below the previous drill intersection.”

[Renard 2] is continuing downwards to a depth and on a scale that makes it unique amongst Canadian kimberlites.—Matt Manson, president/CEO
of Stornoway Diamond

From Renard 2’s first 200 metres, meanwhile, the indicated category gains 900,000 carats. Contained in 4.28 million tonnes of country rock breccia, that accounts for the category’s 16.4% grade reduction. Even so, it has Stornoway wondering about additional potential for the open pit as well as the underground operations.

But until a reserve update comes along, the lifespan remains 11 years. A March 2014 assessment forecast 1.6 million carats per year fetching an average $190 a carat. Last year’s global production, by comparison, was 142 million carats according to De Beers. The Kimberley Process Certification Scheme says last year’s global price averaged $116.17.

Conclusive confidence in the project came with last year’s $946-million financing from Orion Mine Finance, la Caisse de dépôt et placement du Québec and Ressources Québec, an investment and financing agency that’s a subsidiary of the province’s Investissement Québec.

Quebec’s participation in Renard goes back to 1996 when SOQUEM Inc, now a branch of Ressources Québec, helped back early exploration that led to the first kimberlite discovery in 2001. Investissement Québec remains Stornoway’s largest shareholder with a 22.7% stake on a diluted basis, above Orion (17.5%) and la Caisse (6.2%). The province likes to consider itself an investor, not a subsidizer, of mining.

Canada’s other diamond development project, however, surpasses Renard with an expected average of 4.5 million carats annually for 12 years. A De Beers/Mountain Province Diamonds TSX:MPV joint venture, Gahcho Kué has production scheduled for Q3 2016 in the Northwest Territories. Other large-scale diamond development projects include ALROSA’s Verkhne Munskoe mine, scheduled for 2018 production in Siberia, and Rio Tinto’s (NYE:RIO) Bunder project, slated for 2017 production in India.


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